Friday, June 12, 2015

State Budgets and Deficits

Former Paul A Volcker is worried about how the individual states are dealing with their future liabilities, like pension funds. Here is his ideas as reported by Ms Mary Williams Walsh in The New York Times—"Volcker Sees Hidden Peril in State Budgets".

Paul A. Volcker, the former Federal Reserve chairman widely credited with taming inflation in the 1980s, has found what he considers a new economic scourge to battle: shoddy state budgets that he contends push costs into the future for other generations of taxpayers to pay.

When the states live beyond their means in this way, Mr. Volcker said on Monday, their budgets may seem balanced every year, but they are in fact piling up hidden mountains of unpaid bills. The invisible mountains grow bigger every year and eventually become crushing — something that seems to be happening in several states this summer as lawmakers find themselves at a loss to close their deficits.

“The never-ending sense of crisis leads to stop-and-go funding of vital programs,” Mr. Volcker said in his first report on state finances since establishing the Volcker Alliance, a foundation devoted to rebuilding public trust in government at the federal, state and local levels.

I commented on someone's Facebook page that I thought our Commonwealth was headed in the proper direction. I noted how I was concerned that Mr Volcker might be pushing us in the direction of a more uniform way of doing business across the fruited plain and that such a thing would undermine what makes the United States different, our test lab of different ideas, the individual States. I suggested we didn't want to end up like France, for example.

Former Gov. Deval Patrick’s administration secretly diverted nearly $27 million in public money to off-budget accounts that paid for a $1.35 million trade junket tab, bloated advertising contracts, and a deal with a federally subsidized tourism venture backed by U.S. Sen. Harry Reid, a Herald investigation has found.

The maneuver to fatten the hidden “trust” accounts with millions from state quasi-public agencies allowed Patrick to skirt the state Legislature and evade state budget cutbacks during the recession, the Herald found.

State lawmakers never approved the funding plan, and it’s not clear who even knew about it, but it is clear who orchestrated the end-around the budget and got state agencies to contribute.

“The (Patrick) administration asked us to,” said Katie Hauser, spokeswoman for the Massachusetts Convention Center Authority, which kicked in the largest amount to the trusts, $23.5 million.

Senator Harry Reid? The man who, on the floor of the US Senate, lied about Governor Mitt Romney?♠ That Harry Reid?

Hat tip to an unnamed Facebook friend.

Hat tip to the InstaPundit.

Regards — Cliff

♠ There are six things that the LORD strongly dislikes, seven that are an abomination to him: haughty eyes, a lying tongue, and hands that shed innocent blood, a heart that devises wicked plans, feet that make haste to run to evil, a false witness who breathes out lies, and one who sows discord among brothers. —Proverbs 6:16–19